Blockchain-based storage solutions company Sia’s co-founder, David Vorick has recently published a blog in which he states that 2019 is going to be “the year of the 51% attack.”
Mr Vorick elucidates further on the subject by talking about why this is becoming an issue now as well as potential solutions that can be put in place to counter this threat.
He goes on to explain that the game-theory model that secures Bitcoin’s network is based around something called “incentive compatibility,” which he describes in more detail:
“Bitcoin developers strive for something called incentive compatibility. If a protocol has incentive compatibility, it means that the optimal decision for each individual from their own perspective is also the optimal decision for the group as a whole. When protocols are incentive-compatible, individuals can be completely selfish because those selfish actions will benefit the group as well.”
He explains that the model has worked quite effectively within the Bitcoin network as attackers have very little incentive to hack into the network. This is because the exploiting the network would also result in the person’s own currency losing value. This, however, breaks down when the model expands to an altcoin ecosystem that sees many chains using the same algorithms and by extension the same hardware to secure the network.
In other words, this means that the main pillar of “incentive compatibility” collapses and an attacker can potentially use the hardware form one coin network to attack another chain where the person doesn’t have any investments. In this way, the attacker can “double spend” coins, sell whatever they can get their hands on and not worry about losing out on anything as they are not putting their invested coin at risk, leaving them free to exploit and possibly crash their network.
Moving on from citing reasons, he also sheds light on a few suggestions to help prevent 51% attacks.
These include improving means of tracking hardware availability worldwide, which would help exchanges assess if a threat to their network is feasible or not.
Another suggestion put forward by him is suggesting exchanges to strengthen relations with mining farms and hashrate marketplaces so that there is a general agreement on reasonable limits that can be set on who rents hashpower and how much, along with the exchange monitoring its activities.
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